Pedal to the metal: EOFY is officially bearing down on us

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Keen to buy a vehicle, asset or another vital piece of equipment for your business and immediately write off the cost? Well, you better get cracking, as we’re officially entering end-of-financial-year territory.

How time flies. It feels like only yesterday that we were gearing up for the year, and now, it’s all systems go to beat the EOFY deadline.

Why the hurry?

Well, businesses keen to invest in their future can immediately write off the full value of any eligible depreciable asset purchased, at any cost, under the federal government’s temporary full expensing scheme.

But there’s a small catch: the asset must be installed and ready to use by June 30 in order to be eligible for this financial year.

The write-off scheme explained in more detail

Ok, so temporary full expensing is basically an expanded version of the popular instant asset write-off scheme.

It allows businesses, both big and small, to immediately write off any eligible depreciable asset until 30 June 2023 (which was recently extended from 30 June 2022 in the federal budget).

This can help improve your cash flow by allowing you to reinvest the funds back into your business sooner.

Businesses can also immediately deduct the business portion of the cost of improvements to eligible depreciating assets.

Asset eligibility

To be eligible for temporary full expensing, the depreciating asset must be:

– new or second-hand (if it’s a second-hand asset, your aggregated turnover must be below $50 million);

– first held by you at or after 7.30pm AEDT on 6 October 2020;

– first used, or installed ready for use, by you for a taxable purpose (such as a business purpose) by 30 June 2023, and;

– the asset must be used principally in Australia.

Obtaining finance that’s right for your business

When purchasing an asset with the intention of using this scheme, it’s crucial to select a finance option that’s suitable for your business.

And that’s where we can help out. We can present you with financing options that are well suited to your business’s needs now, and into the future.

So if you’d like help obtaining finance that’s gentle on your cash flow, and helps you achieve your long-term goals, please get in touch asap so we can help you beat the EOFY deadline.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Want to switch home loans? Here are ASIC’s top tips for refinancing

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With interest rates at record low levels, we’ve seen a big increase in homeowners wanting to refinance this year. So this week we’ll look at some of ASIC’s top tips for refinancing, plus some of our own for good measure.

More and more mortgage holders are looking for a better deal on their home loan.

According to ABS data, the total number of home loan customers who switched providers last year increased by 27% – from 143,664 in 2019 to 182,016 in 2020.

And a further 200,000 Australian families are expected to switch lenders and save in 2021.

But there’s switching lenders the wrong way, and switching lenders the right way.

Fortunately, Laura Higgins, ASIC’s Senior Executive Leader Consumer Insights and Communication, recently shared some important tips with ABC radio, which we’ve compiled for you below.

1. See if your current lender can cut you a better deal

Here’s the thing about the big banks and home loans: customer loyalty is rarely rewarded.

In fact, the RBA found that for loans written four years ago, borrowers were charged an average of 40 basis points higher interest than new loans.

For a loan balance of $250,000, that could cost you an extra $1,000 in interest payments per year.

“Many times, new customers are offered a better deal than existing borrowers, so if you have a home loan that is a few years old you could potentially get a better deal that saves you thousands of dollars over time,” explains Ms Higgins.

“Even if you’re happy with your current lender, it’s worth checking you’re not paying for features or add-ons you’re not using.”

2. Don’t jump at the easy money: do the maths

There are a lot of incentives out there to entice you to switch mortgages quickly, such as cashback offers or very low-interest rates.

But Ms Higgins urges borrowers to closely compare these offers with the long term costs.

“For example, it’s worth doing the maths to ensure a cashback offer still puts you ahead over the long term when considered against other aspects of the loan, like interest rates and fees,” she explains.

“If you decide to switch lenders, you may end up with a longer-term loan.

It’s also important to consider whether lenders mortgage insurance or other costs, like discharge and loan arrangement fees, may be payable.

“These additional costs can outweigh the benefit of a lower interest rate,” she adds.

“A mortgage broker can also help you compare loans and decide whether to switch.”

Which is very true, if we do say so ourselves!

3. Consider switching to an offset account or redraw facility option

With interest rates so low, many borrowers are aiming to pay off their mortgage faster by making extra repayments.

“Interest rates may be low now, but probably won’t be this low forever. Making some extra repayments now can benefit customers in the long term,” says Ms Higgins.

But if you’re worried about tying up all your funds in your home loan, then you can consider switching to a mortgage redraw facility or offset account, which can allow you to make extra repayments but withdraw them if you need to.

“Either of these options might work for you depending on your goals,” Ms Higgins adds.

“Not all home loans can be linked to an offset account, and often those that can may have a fee charged or a slightly higher interest rate, so it’s worth making sure you’d be saving enough in there to warrant any extra costs.”

4. To fix the rate or not? Or both?

Last but not least, a refinancing tip that we think is worth considering in this climate of record-low interest rates (which probably won’t be around forever).

One of the most common ‘big decision’ questions we get asked when it comes to refinancing is: should I fix my home loan rate or not?

But did you know a third option exists?

Yep, you can fix the rate on some of your mortgage, but not all of it.

This allows you to lock in a low rate for a portion of your home loan, while also taking advantage of some of the flexibility that a variable rate can offer, such as the ability to make extensive additional payments.

If you’d like to know more about it – or any of the other refinancing tips in this article – then get in touch today.

We’d be more than happy to help you refinance your home loan, whether that be renegotiating with your current lender or exploring your options elsewhere.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Is it cheaper to buy or rent your next home? You might be surprised

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While it might feel like property prices are skyrocketing out of reach, the majority of Australian homes are actually cheaper to buy than rent over the next decade, according to a new report.

The latest REA Insights Buy or Rent 2021 Report reveals it is cheaper to buy than rent around 57% of dwellings across Australia, based on modest housing price growth of 3% per year over the next decade.

Now, the results differ by property type and from state to state, which we’ve broken down further below.

But across the nation, the report found that just over half of houses are cheaper to buy over the next 10 years, while the share of units that are cheaper to buy is almost 75%.

So why is it generally cheaper to buy than rent across the nation?

Well, record-low mortgage interest rates are the main driver of favourable buying conditions.

“Interest rates can currently be fixed below 2% per year and the Reserve Bank of Australia has committed to maintaining low-interest rates until at least 2024,” explains Realestate.com.au economist Paul Ryan.

“This certainty that mortgage costs are not going to increase rapidly provides comfort to buyers borrowing larger amounts.”

Given these low-interest expenses, Mr Ryan says that moderate property price growth (which means having an asset that’s growing in value) will likely offset the additional costs of owning a property, such as stamp duty, maintenance and council or strata rates.

State vs state breakdown

Below is REA Insight’s state-by-state breakdown of the percentage of suburbs where it is cheaper to buy than rent. Houses below have three bedrooms, units have two bedrooms:

NSW: 41.3% (of suburbs) for houses, 69.1% (of suburbs) for units

Victoria: 42.2% for houses, 67.6% for units

Queensland: 85.4% for houses, 98.4% for units

South Australia: 73.6% for houses, 98.4% for units

Western Australia: 69.7% for houses, 98.4% for units

Tasmania: 73.2% for houses, 100% for units

Northern Territory: 97.6% for houses, 100% for units

ACT: 65.7% for houses, 100% for units

So here’s the catch in the analysis

The REA Insights analysis assumes buyers already have access to a 20% deposit, which remains the biggest hurdle for many buyers – especially for first home buyers as prices continue to rise.

“Many would-be buyers can already afford loan repayments, but struggle to save a deposit while renting,” adds Mr Ryan.

“Continued price growth may cause additional concern for many in this position.”

How we can help you start buying, and stop renting

As mentioned just above, saving for a house deposit is the biggest hurdle for many of those dreaming of living in a home they can call their own.

But the good news is that there are several potential options to help you get a foot on the property ladder quicker.

One option is the First Home Loan Deposit Scheme, which allows eligible first home buyers with only a 5% deposit to purchase a property without paying for lenders mortgage insurance (LMI).

It’s due to accept applications for a further 10,000 hopeful homebuyers from July.

There’s also a range of first home buyer grants and stamp duty concessions around the country that you might be eligible to apply for.

For more information, give us a call today – we’d love to discuss with you your finance options to help you make the leap from renter to buyer.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

How long do you have to snap up a property in the current market?

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You open up the real estate app on your phone, scroll through a few listings, and then there it is: the home of your dreams, ‘added 1 hour ago’. So just how long do you typically have to act in this hot market?

Well, let’s just say it definitely helps to have spoken to us about pre-approval if you’re actively house-hunting right now.

That’s because the average number of days properties are listed for sale on realestate.com.au reached record lows in every state in March, according to the REA Insights Housing Market Indicators Report April 2021.

And that’s likely got something to do with the fact that demand is extremely strong, with ‘views per listing’ at record highs.

So just how long are properties listed for?

The average number of days properties were listed on the realestate.com.au website was 48 in March 2021.

Properties sold the fastest in the ACT (average of 25 days listed), New South Wales (27 days) and Victoria (30 days).

Tasmania (37 days), South Australia (48 days) and Queensland (54 days) were positioned in the middle of the pack, however, they dropped 9, 17 and 19 days respectively over the course of the month.

And while properties in Western Australia (71 days) and the Northern Territory (59 days) took the longest time to sell on average, they recorded the largest falls in average time online over the past year, down 28 and 14 days respectively.

Views per listing and property price searches are also up

Properties are currently viewed an average of 1694 times on realestate.com.au – up from 819 in March 2020.

“This growth can be attributed to several factors, including record-low borrowing costs, government support packages for first-home buyers and limited available stock,” the REA report states.

Buyers are also on the hunt for more expensive properties than they were a year ago.

The percentage of searches for properties valued between $750,000 and $2,000,000 has increased to 52% in 2021, up from 47% in 2020.

Get in touch today to find out more about pre-approval

Make no mistake: competition amongst buyers is fierce.

More people are house hunting for more expensive properties, with fewer days to secure finance for the home of their dreams.

This all highlights the importance of exploring your borrowing options with us in advance, in order to increase your chances of securing a property in this hot market.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

COVID-19 repayment amnesty over: how to avoid a bad credit rating

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The COVID-19 loan deferral program and credit reporting amnesty is now over, which means banks will report any late repayments on mortgage or small business loans to credit agencies unless you’ve entered into a hardship arrangement.

The banks’ mortgage deferral program and subsequent credit score reporting amnesty officially ended on April 1.

The package was created during the peak of COVID-19 to provide loan repayment relief for almost one million home and business loan borrowers facing financial hardship.

Luckily, many people have since been able to resume their repayments – as of late February, just 2,803 small business loans (1.2%) and 22,480 housing loans (5%) were still deferred, figures show.

But, we’re not out of the woods yet.

The JobKeeper wage subsidy scheme has also just officially ended, which has the potential to put tens of thousands of households and businesses at risk once more.

If you think you might be impacted by JobKeeper, read on

Latest reports indicate up to 150,000 workers could lose their jobs this month due to JobKeeper ending.

If your ability to repay your home or small business loan might be affected in the months ahead, then it’s important to act now, rather than wait until after you’ve missed a repayment.

That’s because by then it could be too late and it might end up on your credit file.

Your most appropriate course of action, however, will depend on your individual circumstances, which we’ve broken up into two categories below.

Category 1: Repayments will be tight, but possibly doable

If your upcoming loan repayments are looking tight, but possibly doable, then get in touch with us today to discuss some financing options that might make your repayments more manageable.

These options might include:

– switching to interest-only repayments for a period of time,
– renegotiating your rate with your current lender,
– refinancing to another lender,
– debt consolidation, or
– a combination of these and other measures.

Category 2: You don’t think you’ll be able to make your repayments

If you’ve lost your job due to JobKeeper ending, for example, and the chances of making your repayments are looking a little grim, then it’s important to get in touch with your bank today to discuss entering into a hardship arrangement.

Not only will this potentially give you some breathing space on your repayments, but it will help keep any missed payments off your credit file, as the Australian Banking Association states below:

“For customers that enter into another form of hardship or forbearance arrangement with their bank, banks will not report the repayment history information. Instead, they will leave the field blank for the duration of the arrangement.”

If you’d like to discuss any of the above in further detail please don’t hesitate to get in touch today – we’re here to help any way we can.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.